ARABS-OPEC - Jan. 12 - Cartel Raises Output.

In an emergency meeting in Vienna, OPEC members agree to raise their total output quota to 24.5m b/d as of Feb. 1. OPEC Pres. and Qatari Oil Minister Abdullah Hamad Attiyah says: "OPEC is trying to send a very strong message that it is doing the utmost to ensure adequate supplies". Though the new quota represents an increase of 6.5% from the 23m b/d level set only a month ago, industry analysts say the actual amount of new oil that enters the market may be smaller, meaning any downward effect on prices could be muted. That is because the cartel's sensitive politics required every member to get a proportionately higher share of the quota, even though Venezuela's production will remain only a fraction of its official quota until strike-damaged facilities are repaired. The only way that OPEC, which pumps about one-third of the world's oil, will be able to make up for Venezuela's lost share in the short term is if other members produce above their set limits, analysts say. (In December, total OPEC production fell short of the 23m b/d limit by several hundred thousand barrels. OPEC had sought to stamp out so-called quota cheating at its Dec. meeting, when it raised the official quota from 21.7m b/d. But since then, the strikes in Venezuela against the government of Pres. Hugo Chavez, along with concerns about a possible war in Iraq, have pushed prices sharply higher, throwing a wrench into those plans). Analysts say the increase in the overall quota suggests that OPEC members that can pump more oil - only Saudi Arabia and the UAE have significant spare capacity - will do so to some extent, even if their individual quotas are rising only marginally. Saudi Arabia's official level, for instance, rises to 7.96m b/d from 7.48m b/d, but analysts say it could produce as much as 10m b/d. Saudi Oil Minister Ali Naimi said: "There is no shortage. We never allowed the shortage to take place. There is a significant shortage from Venezuela, but there is no shortage in the international market".